How To Get Business Insurance In 4 Easy Steps
You’ve already asked the question, “Do I need business insurance?” And the answer was an enthusiastic, “Why yes! Yes, I do!”
So…what do you do next?
Small business insurance is an important cost of doing business but obtaining coverage doesn’t have to be an overwhelming process. Once you know the reasons behind your need to purchase business insurance (a legal requirement or a desire to protect your assets), you can set out to protect your business and the people you employ with confidence. With the plethora of online one-stop insurance shops at your fingertips, it is possible to get business insurance from a reputable company in as little as thirty minutes. (That’s not a guarantee for Luddites, people with slow internet connections, or my mom.)
If you are a small business owner and are starting to look at your business insurance options, we are here to help. Follow the next 4 steps and you’ll be well on your way to buying appropriate insurance coverage!
Table of Contents
Step One: Assess Your Risks & Choose The Insurance You Need
Whether you do the research online or meet with an insurance expert, the first thing you’ll need to decide is what type of business insurance you are in the market for. Give some thought, not only to your legal requirements, but also to the specific risks your company might face. Are you located in an area with increased fire risk (California) or flooding after hurricanes (Florida)? Are you in a state that is considered small business or consumer friendly? Do you work with vendors and want to insure your partnerships? Knowing what you need is more than half the battle.
Sit down with a list of insurance types and research whether your business could benefit from different kinds of coverage. Once you’ve done your due diligence, you are ready for step two.
Here is a list of some of the most common types of business insurance to get you started:
|Type of Insurance||What It Covers||Who It Is For|
Protects your business from the threat of a lawsuit
Protects your building and things inside your buildings from damage and accidents
Businesses with a physical property site and products located in those physical locations
Provides resources if your business is forced to stop or relocate
Businesses located in riskier areas and businesses who might work with vendors in risky areas
Commercial Auto Insurance
Provides protection from accidents on your commercial vehicles
Businesses that rely on automobiles to do business
Provides protection to you and your employees should they become injured on the job
Professional Liability (E&O)
Protects your business during a lawsuit if your business commits errors or malpractices
Any business that provides a service
Product Liability Insurance
Protects a business from a lawsuit related specifically to the product it sells
Any business that manufactures, sells, or distributes a product
Home-Based Business Insurance
Protects any business-related items inside your home not covered by home owner's insurance
Any business owners running out of their own homes
Business Owners Policy
Includes both general liability and commercial property insurance
Provides a bigger ceiling for the legal costs of a lawsuit that extends your liability coverage
Step Two: Gather Business Information
In order to receive an accurate policy quote from an insurance company or a comparison site, you will need to come prepared with some information about your business. Insurance is a numbers game and the company you work with will need your business numbers to accurately gauge your riskiness. So, gather the information before you shop. Depending on the policies you are buying, you may need to provide quite a few details about your business. The most basic questions are:
- Where are you located?
- How many employees do you have?
- What is your payroll?
- How much does your business make?
If you need to insure specific equipment, property, or vehicles, bring information about those assets. The more prepared you are, the better.
Step Three: Comparison Shop
Now that you have all the numbers and pertinent information at your fingertips, it’s time to shop around and find the best fit for you and your business. A few sites, including Insureon, CoverWallet (see our review), and Coverhound, will comparison shop for you and show you the best policies for your business. Some commercial business insurance companies also offer online quotes and rates.
If you have larger or more complicated assets or many moving parts to your business, sitting down with an insurance specialist is the way to go.
Step Four: Purchase!
You know what you want, you’ve found the best price, and now the only thing left to do is purchase your policy.
Done and done. Pay those premiums and protect your business!
Frequently Asked Questions
What Insurance Does A Small Business Need?
What kind of insurance you may need is entirely dependent on the business you run. The bigger your company or the more assets you are protecting, the more insurance you might need. If you have a physical storefront — or even if you are in the business of giving advice (people are pretty litigious if they think they received bad advice) –, protect yourself. It would be devastating to shutter your business because of an accident or mistake that could have easily been protected by investing just pennies of your profit.
How Much Is Insurance For A Small Business?
According to Insureon, an insurance provider that specializes in commercial businesses, the average cost for business insurance among their customers in 2017 was $1,281 per year and the median cost was $584. For a more detailed response, check out our article How Much Does Business Insurance Cost?
Do You Need Insurance For An LLC?
While classifying your business as a Limited Liability Corporation (LLC) might protect your personal assets in the event of a lawsuit, it still doesn’t prevent your business from lawsuits in general. One lawsuit can eat up all of your profits and close your business for good.
Is It A Legal Requirement To Have Business Insurance?
If you have employees, there are a few legal requirements. Employment laws and insurance laws vary by state, so research what your state requires of you. In general, if you have one employee you will need to provide workers’ compensation, disability, and unemployment insurance. Also, even though it is not a government requirement, some clients and partners or landlords will require proof of insurance.
How Much Is Small Business Insurance Per Month?
The monthly cost will vary depending on what type of insurance you purchase, how large your company is, and how many policies you have. However, a sole proprietor looking for one-million dollars in liability coverage may pay as little as $30 a month.
Ready, Set, Go!
It really is that easy. Research what you need and want, gather your information, comparison shop, and purchase. With so many online retailers, it is easy to grab a quote and play around with cost factors. And, as usual, it is best to talk with an insurance expert that is familiar with your industry to help you think about risks and opportunities for protection that may have slipped your radar.
Insurance is about peace of mind, and it’s also about valuing the work you’ve put into your business enough to not let an accident, a lawsuit, or an Act of God tear it all down. Follow these four easy steps to get small business insurance, and you can sleep and rest easier.